Flexibility Key to Success in Liquor Logistics
The next time you settle down after a hard day with a glass of wine or a mixed drink to help you unwind, take a moment to understand how that alcoholic beverage came to fill your glass. A lot depends on which country you are drinking it in and the many tariffs designed to protect that country’s own liquor production, export and importation. Even more depends on where the grapes were grown or where the liquor originated and was distilled.
To say the logistics of moving alcoholic beverages around the world is "fluid" is more than just a bad pun. It’s an absolutely correct assessment! You have to be prepared to react to constant change in the way you manage logistics for these products.
Think about all of the points in between your drink’s point of origin and the glass in your hand. Was it bottled at the source or shipped in bulk to be bottled in your country or region?
Bulk shipping has become more popular as vintners look to cut shipping costs. This involves using special flexibags inside of 20-foot containers filled with 6,340 gallons (24,000 liters) of wine—a food grade liquid with an expiry date that is unstable and very heavy, weighing in at over 59,000 pounds (over 26 metric tonnes) per container.
In addition, just within the USA and Canada, there are myriad import and export laws and tariffs—known as the Three Tier System—governing the cross-border movement of alcohol that have been in existence since the days of Prohibition. Not only that, but there are laws governing the importation and exportation of alcohol across state and provincial lines as well.
Economic growth, stagnation or contraction in every wine and alcohol producing country around the world also contributes to the cost of importing and selling liquor in those countries. Recent middle class growth in China, for example, led to the meteoric rise in demand for high-end wine and alcohol in that country until the central government clamped down on imports.
Each country has its own laws regarding the importation and duties applied to wine and alcoholic beverages. Add to this, factors affecting the production of wine, such as climate, labor unrest, poor harvest or excess production and oversupply, and you can see why the precise craft of liquor logistics needs to be very flexible.
Navigating the ocean of this alcohol supply chain is fraught with challenges. Every time someone touches the product, the final consumer price goes up to cover that cost. With every duty charged on the importation of those alcoholic beverages, the price goes up again. Factor in charges for transportation, handling and marketing, and you quickly realize why that bottle of French Bordeaux is so expensive.
That’s why liquor and wine companies are constantly trying to shave costs in the methods they use to deliver their products to consumers. As a provider of logistics services to producers, you have to be flexible and ready for anything. You have to understand when a company has a poor yield of grapes and help them find the most economical means of managing and transporting their product to the hands of their distributors and customers.
You have to be strategic in your thinking when their CFO tells his logistics team to cut transportation costs by 10 percent. You have to be flexible in the options you recommend, possibly suggesting less costly ocean conveyance in bulk containers. Flexibility is always the key to a successful partnership where liquor logistics are concerned.